The university is dropping its investments in companies with ties to fossil fuels, Uhanthaen Ravilojan reports on the tangible impacts of this move
In 2016, Ryerson students Emma Beattie and Ben Donato-Woodger were arrested while protesting the Kinder Morgan pipeline construction at Parliament Hill.
“Civil disobedience is not our first option, but it has become our only one to make our government’s policy align with climate science,” Donato-Woodger previously told The Eyeopener.
Luckily for them, they were let off with a warning and the video of them getting arrested brought over 6,000 views to the Facebook page of their organization, Divest Ryerson.
Divest Ryerson is a student group that pushed Ryerson to divest— meaning to stop investing its money in fossil fuel companies. Their efforts included gathering a petition of over 1,000 signatures and engaging in peaceful protests.
A fossil fuel company is one that harvests, processes or transports fossil fuels such as coal, oil or natural gas.
The burning of fossil fuels creates greenhouse gases such as carbon dioxide which contribute to climate change and air pollution, which can lead to diseases like lung cancer.
Ryerson is not the first university to be pushed to divestment. In 2017, Laval University became the first Canadian university to formally create a public and formal commitment to divest from fossil fuels. Laval did so by hiring a responsible investment committee that recommends methods and practices to help achieve their goal. It also issues an annual progress report. The Université du Québec in Montreal sold off its fossil fuel assets in 2018, and Concordia University recently announced that it will fully divest by 2025.
As stated in a report by Ryerson’s Board of Governors in November 2019, Ryerson is currently investing in fossil fuel companies such as Pembina Pipeline, which transports natural gas to and from Western Canada, and Suncor Energy, which produces synthetic crude from the Alberta oil sands.
The Eye reported in 2013 that the money Ryerson invests is from its endowment fund—a fund made up of all the donations Ryerson receives. When Ryerson invests its endowment fund, it pools it together with funds from other universities and institutions. Fiera Sceptre, an investment firm, manages the pooled money and decides which companies it is investing into.
“Investors can be just as profitable without investing in fossil fuels”
According to the UN Intergovernmental Panel on Climate Change (IPCC), preventing the worst effects of climate change requires mitigating global warming so the planet warms by less than two degrees Celsius.
According to a study by Olaf Weber, University of Waterloo’s Research Chair in Sustainable Finance, as well as by PhD student Truzar Doordi and Masters student Vasundhara Saravade, when institutions like Ryerson divest from fossil fuels, they help fight climate change.
The study goes on to state that if more than a fifth of our current fossil fuel reserves are burned, we will surpass this two-degree Celsius threshold.
A good way of ensuring that only less than a fifth of reserves are burned is by divesting. Let’s say Pembina wished to build a new pipeline. Pipelines can cause environmental damage through potential leaks that can contaminate groundwater, harm wildlife and infringe on the sovereignty of Indigenous lands.
TC Energy’s Coastal GasLink pipeline has garnered international controversy and protest due to its decision to build a multi-billion-dollar pipeline, which would run through Wet’suwet’en unceded territory without the consent of its hereditary chiefs. The Royal Canadian Mounted Police is currently enforcing a December Supreme Court decision that would remove any obstacle in the way of building the pipeline.
Companies like Pembina usually don’t have money lying around to pay for big projects. Instead, they can sell shares of stock or borrow money and later pay the loans back after the pipeline is completed and the oil money trickles in.
Often, companies do both. Their stock is sold on the stock market for a specified price. The higher the price of their stock, the more money they will make selling it, and the more likely it is they can build a new pipeline.
Weber and his team looked at how 24 different divestment announcements, endorsements and campaigns—such as Naomi Klein’s article in The Nation endorsing divestment, or Glasgow University announcing its divestment from fossil fuels—affected the stock prices of 200 different fossil fuel companies.
They found these events lead to a significant decrease in the companies’ stock prices. Therefore, divestment could directly affect Pembina’s attempt to build a new pipeline.
For example, Norway’s Sovereign Wealth Fund’s divestment announcement resulted in a 0.24 per cent decrease in share price—more than five times as much as analysts predicted the stock price to decrease the day before the announcement.
They also found the more companies announced they were divesting, the more stock prices of fossil fuel companies would fall—suggesting a snowball effect.
Deborah de Lange, a professor at the Ted Rogers School of Management, argues that divesting from companies that lack “a social license to operate” helps “develop and improve [Ryerson’s] image and stature through symbolism.”
Much of de Lange’s teaching and research revolves around the UN IPCC sustainability goals. She says divestment helps Canada meet its climate change goals, like those outlined in the Paris agreement—an agreement written by the United Nations and signed by 186 countries.
“All Canadian institutions need to materially support the Paris Agreement and thereby make Canada a member in good standing in the international community,” says de Lange, “Divestment supports the world’s goals.”
Matthew Wright has created the group Fossil Free Ryerson to pick up where Divest Ryerson has left off in pushing for full Ryerson Divestment. “Divest Ryerson is inactive and I’m not sure if it’s dissolved…I assume their leaders graduated.” Wright is currently running for the Board of Governors with David Jardine and Akash Kar. Divestment is part of Wright’s platform.
Wright says it’s important for students to get involved if they want Ryerson to divest. “Change will only come if the university sees that students care about this issue,” says Wright. “If the university’s actions don’t represent the values of the students it serves, then that discrepancy needs to be corrected.”
de Lange said divestment is important for Canada to try having good social standing. “Its institutions need to materially support the Paris Agreement and the United Nations Sustainable Development Goals.”
Some students, however, oppose divestment. But de Lange argues fossil fuel investments are not as valuable as we might believe. “Peer-reviewed academic literature for a long time has shown that investors can be just as profitable without investing in fossil fuels,” she says.
“There has rarely, if ever, been a need to have fossil fuels…to maximize returns,” she says. “In fact, risk management recognizes that commodities such as fossil fuels should not be in portfolios because they are boom and bust industries, they are too risky.”